The Bogus IRS
"Scandal" is an Actual Supreme Court Scandal
By William Boardman
And Who Is The Poster Boy for Tax Exempt Political Hit Teams?
Karl Rove is the real poster boy for the so-called IRS (Internal Revenue Service) "scandal" of taking a closer look at applications by political organizations seeking a 501(c)(4) tax status that makes them not only tax exempt but protects their donors with anonymity.
That 501(c )(4) is one sweet deal: not only do these organizations get untraceable, tax-free money laundering for their political activities, they gat a taxpayer subsidy to do it.
And it gets better: some of these activities used to be illegal and people working for the Committee to Re-Elect the President (CREEP) -- Nixon in 1972 -- were convicted of law-breaking, as were some corporate donors. In October 2010 in the New York Times, Jill Abramson noted one illegal Nixon operation was run by "a group of Nixon loyalists, some of whom are leading this year's non-profit push."
Early in 2010, Karl Rove, who was with Nixon in 1972, founded American Crossroads, a perfectly legal, openly political, tax-exempt 527 organization, with no limits on the amount or source of their contributions, and no spending limits. Despite these freedoms, 527s were still prohibited from openly supporting particular candidates, and they had to register with the IRS, disclose donors, and file reports.
The Problem With 527 Organizations Is Some Transparency
527 organizations (a broad category that includes Super PACs) have been an open charade in the democratic process for years, avoiding direct support of candidates while producing material that could only support their chosen candidates. For example the 527 organization Swift Boat Veterans for Truth attacked presidential candidate John Kerry during the 2004 election, without actually expressing direct support for President Bush.
In June 2010, Karl Rove and American Crossroads founded Crossroads GPS (Grassroots Policy Strategies) that, as a 501(c)(4), had even fewer constraints. American Crossroads was one of 1,500 applicants for 501(c)(4) status in 2010.
In 2012 there were some 3,400 applications.
According to the Internal Revenue Code passed by Congress, 501(c)(4) status is reserved for "civic leagues or organizations not organized for profit but operated exclusively for the promotion of social welfare" [emphasis added]. In 1959, during the Eisenhower administration, the IRS decided to ignore the letter of the law, and wrote rules for 501(c)(4) organizations requiring only that they be primarily for the promotion of social welfare.
Supreme Court Puts Money-ocracy Over Democracy
The difference between "exclusively" and "primarily" created a loophole even a non-lawyer could exploit, but it became most useful to $100 million outfits like American Crossroads only after the Supreme Court, with its January 2010, 5-4 decision in Citizens United (558 US 310), opened the American political process to virtually any money from any source, with almost no duty to disclose anything.